Lexus Sees Years of Methodical Growth in Emerging Markets

Alan Ohnsman and Siddharth Philip

January 14, 2014, 6:26 PM EST

Toyota Motor Corp.’s Lexus luxury line aims to grow as much as 10 percent annually for the next 30 years as it expands in the U.S., its biggest market, as well as in emerging markets from China to Vietnam and Brazil to Peru.

“I’m trying to get to nice methodical growth,” said Mark Templin, the executive vice president for the unit, in an interview in Detroit yesterday. “First and foremost, I want to establish the brand. If you get that right, the volumes will follow.”

Lexus expects the biggest volume gains to come from the U.S., even as emerging markets reduce the American share of the unit’s global deliveries, Templin said. The unit will expand U.S. sales by adding high-priced cars rather than by following German competitors racing to add sub-$30,000 models, Jeff Bracken, the brand’s U.S. chief, said Jan. 13.

Deliveries for Lexus, the top-selling U.S. premium brand for 11 years until falling behind Bayerische Motoren Werke AG and Daimler AG’s Mercedes-Benz in 2011, should increase 6 percent to about 290,000 this year, Bracken said in an interview at the North American International Auto Show in Detroit.

At the event yesterday, Lexus showed the RC F performance car, a luxury coupe with an engine that delivers more than 450 horsepower. While the company hasn’t disclosed pricing, it’s the type of “halo” model Lexus needs more of, Bracken said. Lexus’s least-expensive model is the CT hybrid, which begins at about $32,000 and “we won’t go below that,” Bracken said.

V-8 Power

While Lexus may not regain the luxury lead anytime soon, its U.S. business prospects have improved since 2012 as the yen weakened against the dollar, boosting the profitability of models imported from Japan, said Templin. He said the company would continue to build its core products in Japan, even as the carmaker builds its SUVs in Canada.

Entry-level vehicles such as the $29,900 Mercedes-Benz CLA helped the Daimler brand grow 14 percent last year, and Volkswagen AG’s Audi unit plans to introduce an A3 sedan this year matching CLA’s price.

The RC F, which replaces the $63,600 IS F sedan, will arrive later this year. The vehicle has an engine that will make it the “most powerful V-8 performance car ever developed” by the brand, Bracken said.

The U.S. sales unit for Lexus is in Torrance, California.

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